The Royal Institution of Chartered Surveyors has today published the paperwork behind the recent Countrywide £10m accounting controversy.
Published on the RICS website, it reveals that the £10m of unclaimed client funds transferred from the client account into a company account was not intentional deceit.
The unconventional move was discovered during a routine inspection, as part of Countrywide's membership of RICS. The paperwork released this morning also shows the effort that Countrywide went to, to investigate the issue when it was identified.
“After an internal review, I put an immediate stop to the practice” explains group managing director Paul Creffield in his lengthy evidence to the RICS.
He says that each movement of funds to the office account from the client account was “quite modest in quantum terms” but added up to a vast amount over the course of 10 years.
Creffield tells the RICS that Countrywide's policy has now changed and that unclaimed client funds whose owners cannot be identified will, in appropriate circumstances, be paid to charity in line with industry custom.
Countrywide has repaid all sums from the office account to the client account and says that in any area of doubt, the sum was repaid - meaning that an overpayment of £100,000 has probably been made to the client account.
It appears from today's release that a former employee of the firm - a senior manager - was responsible for the original problem; he or she is now no longer with Countrywide.
“The decision to retain these funds was a policy decision made at a senior management level by personnel employed at the time by the firm and was not the product of deceit” says the RICS.
“Management at the firm has since changed, and the current CEO, appointed in 2018, provides a witness statement setting out his disapproval of the firm’s decisions and actions” it continues.
Last week Countrywide admitted two charges of breaching RICS’ codes.
One was that £10,093,866 of unidentified client funds in Countrywide’s lettings division - which had remained unclaimed for six years or more - had been diverted from the agency’s client account to its office account. This involved an alleged failure by Countrywide to safeguard its clients’ funds, RICS claimed.
The second was that the firm’s conduct represented “a serious and prolonged disregard to professional obligations set out in RICS’ client money guidance document.”
In response, RICS imposed on Countrywide a £100,000 fine; the agency also received a reprimand and was ordered to pay £600 costs.
The RICS paperwork in full is here.